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Business Ethics

Business Ethics. A brief introduction and framework for discussion. GBU 325 – Business and Society. Ethics Defined. Business ethics is defined as The study of right and wrong, good and evil, just and unjust.

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Business Ethics

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  1. Business Ethics A brief introduction and framework for discussion. GBU 325 – Business and Society

  2. Ethics Defined • Business ethics is defined as • The study of right and wrong, good and evil, just and unjust. • “The study of the general nature of morals and of specific moral choices; moral philosophy; and the rules or standards governing the conduct of the members of a profession.” • The American Heritage Dictionary

  3. Why study this topic? • Enron • Global Crossing • MCI/WorldCom • Tyco • General Electric • Merrill Lynch • Martha Stewart and Imclone

  4. Henry Blodget and Email • External: “We think LFMN presents an attractive investment.” • Internal: “I can’t believe what a POS that thing is.” • Barred for life from the financial services industry • Personally paid $14 million fine. • Merrill Lynch paid $200 million fine.

  5. Bernard Madoff • Ponzi scheme • Possibly lost more than $50 billion • Impacted individual investors and charities • Similar scheme impacted Nacogdoches for $100 million plus.

  6. Why have a company Ethics Program? • Legal Requirements • Sarbanes-Oxley (2002) • Federal Sentencing Guidelines (1991) • Liability protection • To attract customers, employees and investors.

  7. Ethics Training • Should include: • Copy of the organization’s code of ethics http://ethics.walmartstores.com/ • Discussion of relevant compliance laws • An ethical decision-making model • Resources for help (Helpline, email, web resources) • Role-playing scenarios

  8. Ethics and Decision Making • Ethics is basically about making decisions. • Good people make bad decisions. • They make decisions and say things without considering the long-term consequences. • Martha Stewart and Bill Clinton would probably make different decisions now.

  9. Model for Decision Making Factors that influence decision Consequences and Conflict Individual Situation Decision Framework for making better decisions

  10. Values Culture Laws Religion History Stage of Economic Development Corporate Culture Leaders Training Opportunities Controls Factors Influencing Decision Variables that impact the individual and the organization Individual Organization

  11. Decision Making Framework • What information do I need to make the decision? • Identify the possible ethical issues, if any. • Take the quick quiz of ethics. • Seek external resources / advice. • Make the decision. • Post-decision evaluation.

  12. Ethical Quick Quiz • Is it legal? • Is it good for the company? • Is it good for my career? • Would I be proud to see my actions printed in the newspaper? • What would I tell my child to do? • Will I feel good about my decision later?

  13. External Resources • Ask boss / co-worker • Review company ethics code and/or employee policy manual • Call the company hotline (if available) • Visit with a lawyer • Visit with a preacher, family member, or friend

  14. Weigh the Issues • Consider what you gain against what you might possibly give up. • Example: Martha Stewart gained $200,000 from the sale of Imclone but gave up an estimated $400,000,000 and served jail time.

  15. A Real Life Example • A salaried employee needs to fill out a travel reimbursement form after returning from a trip. • The employee knows that co-workers routinely pad their expense reports to compensate themselves for unpaid over-time. • Management does not crack down on this practice and does not require receipts for expenses under $25. • Should the employee pad his report?

  16. Real Life Example – Cont. • What is the ethical dilemma? • What organizational forces are influencing this situation? • What can be gained and lost from this decision? • What can be discerned from the Quick Quiz? • What would YOU do?

  17. Discussion Questions • Why is it hard to make ethical decisions? • Why don’t people consider the long-term consequences of their actions? • Can ethics be taught?

  18. Ethics in GBU 325 • Two chapters devoted solely to ethics. • Ethical dilemmas in many of the cases and chapters. • An example: J.D. Rockefeller and Standard Oil • Leader and Organizational Influence on Ethics • Ethics of the time versus ethics of today. • What can be applied to your future careers?

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